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Posts Tagged ‘insurance’
Friday, October 2nd, 2009
 Tax and Insurance questions were one of the most interesting issues raised at the MBA Reverse Mortgage Conference in San Diego earlier this month. As the reverse mortgage product evolved, they are also two questions that are likely to be closely attended to.
A report by the Government Accountability Office (GAO) cited the phrase “Never lose your home” as a problem in reverse mortgage advertising because if a borrower does not pay the tax and insurance obligations on the home, the borrower can be foreclosed upon. Right now 2% of all reverse mortgages go into default due to so-called T&I issues. However when these issues were discussed at the MBA conference, it appeared that there were things that borrowers could easily do to avoid these potential problems. Many just did not know they could do so.
One is to set up a tax and insurance set-aside account. Doing so would take some of the reverse mortgage proceeds and set them aside to pay taxes and insurance on the home. This would assure that the borrower always has the money to pay for taxes and insurance and that they are paid automatically. It is one easy way for a borrower to handle the tax and insurance obligation. However, many borrowers currently do not take advantage of this option.
Another is that there are many tax exemptions for seniors. However, many seniors do not realize they are eligible. Seniors should inquire with their states and municipalities about property tax exemptions that they may be eligible for. While there is often a lot of red-tape surrounding these exemptions, they can save seniors significant amounts of money.
Tax and insurance obligations do not need to be reasons for a reverse mortgage to default. If borrowers are responsible and plan in advance, they can alleviate the obligations before they ever become a problem.
Tags: borrowers, insurance, MBA, property taxes, reverse mortgage, reverse mortgages, seniors, set-aside, T&I, tax, taxes
Posted in Consumer News, Industry News | No Comments »
Tuesday, June 16th, 2009
 When members of the reverse mortgage industry talk about cross-selling and when prospective borrowers approach a reverse mortgage, they often talk about “long term care insurance.” Long term care insurance is a product that is completely separate from a reverse mortgage in which borrowers pay premiums in order to hopefully receive coverage/reimbursement to pay for long term care, should they need it. Long term care would include things like a stay in a nursing home or an attendant to help a senior bathe and dress. It appears extremely difficult to find information on the exact way these programs work in an objective manner online. From all the chatter it should come as no surprise that at a Senate hearing today lawmakers and watchdog groups cautioned that more consumer protections are needed.
Some of the concerns about long term care policies include that there is no guarantee that a policy purchased today (or 10 years ago) will still meet the needs of the client in 20 or 30 years (people are often advised to buy long term care insurance when they are still in mid-life, before they need it). Since some private long term care insurers are partnering with Medicaid, consumer protections become more dire because at least 30 states will soon have programs to encourage middle-income residents to acquire long term care. Among the desired protections are ensuring that the premiums do not increase too dramatically, that complaints are addressed in a timely fashion, and that insurance agents are trained. Consumers are urged to educate themselves about the fee increases in their policy, the events that will activate it, and how they will be protected against inflation.
Finally, as is true with reverse mortgages, many other products can prove to be viable options for those exploring long term care insurance, including mutual funds, investments, and, in some cases, even reverse mortgages.
Tags: consumer protection, consumer protections, insurance, long term care, long term care insurance, Medicaid, premiums, reverse mortgage, reverse mortgage industry, reverse mortgages, Senate
Posted in Consumer News | No Comments »
Friday, June 5th, 2009
 Reverse Mortgage Daily wrote a blog post today focusing on the case of a man in Minnesota who pleaded guilty to swindling his mother and was sentenced to the maximum thirty days in jail and five years of probation. Amongst the ways the man swindled his mother was through a reverse mortgage, and the writer wondered if there was a way to protect seniors from such crimes without harming the reverse mortgage industry.
I think the answer is yes.
Every year there are several stories of individuals who have been swindled out of their life savings. We could protect those individuals without harming the reverse mortgage industry by allowing them to buy insurance that would protect their life’s savings if someone has been convicted of defrauding or swindling them, allowing them to replace a portion of the money they have lost and ensuring that they still have money to live on in their old age.
Private companies and/or states could offer insurance against swindling/financial fraud. The insurance could be either mandatory or optional, and could taken out by the policy holder at any point throughout their life. In the same way the FDIC ensures up to $100,000 of each individual’s money in case of a bank failure, the financial fraud insurance would serve to protect an individual’s life savings against instances of swindling, theft, or fraud. While the policy would not necessarily be unlimited, policies of even up to $100,000 could do a lot to ensure that individual’s life savings are protected. Although cases of fraud are not incredibly common, they can be catastrophic to the individuals involved when they do occur. These policies would benefit those involved in something like the Madoff scandal as well.
The only way to collect on the insurance policy would be to show that an individual and/or corporation had been convicted of swindling the policy holder. In this case, the guilty plea from the son would be sufficient to guarantee the mother her pay out. If such insurance existed and the mother was able to collect on it, she would be left with more than the eighty dollars currently remaining in her bank account.
Correction: The man was sentenced to thirty days in jail, not thirty years.
Tags: bank, elder abuse, FDIC, financial fraud, fraud, insurance, Madoff, money, reverse mortgage, Reverse Mortgage Daily, reverse mortgages, savings, swindling, theft
Posted in Consumer News, Industry News | No Comments »
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Tax and Insurance questions were one of the most interesting issues raised at the MBA Reverse Mortgage Conference in San Diego earlier this month. As the reverse mortgage product evolved, they are also two questions that are likely to be closely attended to.
